A House committee meeting today quickly restored a variety of consumer protections to a sweeping bank deregulation measure that was passed by the state Senate last week.
The protective amendments included reducing the number of fees financial institutions can charge, limiting how much variable interest rates on consumer loans can rise and fall, and restoring a 25-day interest-free "float" period for purchases made by credit card.
The entire bill may come up for a formal vote by the House Economic Matters Committee tomorrow. The committee is expected to support the controversial legislation and send it to the House for debate this week.
"This is the bionic bank bill," said Del. R. Terry Connelly (D-Baltimore County), after the committee votes. "We took the Senate bill and remade it--just like they remade the bionic woman."
The Senate version of the deregulation measure, which lobbyists from the banking industry had helped draft, had either eliminated or not included the consumer provisions supported by the committee today. As a result, Gov. Harry Hughes and consumer advocates had labeled the bill unacceptable and Hughes had said he would support the measure only if the House altered it to help borrowers.
After today's committee vote on the amendments, Hughes met with House and Senate leaders to see whether a standoff could be avoided between the two Houses that would force the issue to a conference committee. The group discussed some compromises on the House amendments that would give the banks more leeway but did not resolve the issues and is expected to meet again tomorrow afternoon.
The measure as amended still provides a large degree of relief for financial institutions. It allows for the first time a membership fee on credit cards issued by Maryland lending institutions and department stores. Several major Maryland banks last year moved their credit card operations--and some 1,000 jobs--to Delaware, where deregulation and credit card fees are already in effect.
It also provides that financial institutions will be able to charge variable interest rates on consumer loans, and it restricts the circumstances under which a balloon loan--where interest is paid all along and the principal in a lump sum at the end--can be extended by a borrower.
Most committee members disagreed with the banking lobbyists' contentions that the Senate version of the deregulation measure was vital to allow Maryland and its banks to compete with Delaware.
"I'm personally not concerned with what Virginia which adopted deregulation this year and Delaware are doing," said Del. Joseph V. Lutz (D-Harford). "I'm concerned about Maryland. There are too many people out there who need to be protected against themselves."